EDGE BANGLADESH MUTUAL FUND
This Offer Document sets forth concisely the information about the
Fund that a prospective investor ought to know
before investing. This Offer Document should be read before making
an application for the Units and should be
retained for future reference.
Investing in the EDGE Bangladesh Mutual Fund (hereinafter the Fund)
bears certain risks that investors should
carefully consider before investing in the Fund. These risks are
normally associated with investing in securities
including loss of principal amount invested. There can be no
assurance that the Fund will achieve its investment
objectives. The Fund value can be volatile and no assurance can be
given that investors will receive the amount
originally invested. When investing in the Fund, investors should
carefully consider the risk factors outlined in the
document.
THE SPONSOR, ASSET MANAGEMENT COMPANY OR THE FUND IS NOT
GUARANTEEING ANY RETURNS.
The particulars of the Fund have been prepared in accordance with (
) ,
, as amended till date and filed with Bangladesh Securities and
Exchange Commission.
Size of Issue Initial Size BDT 10,00,00,000 (Ten Crore)
Total Number of Units 1,00,00,000 (One Crore)
Initial / Opening Price BDT 10 (Taka Ten) per Unit
Initial Subscription Opens July 25, 2018
Sponsor & Asset Manager
EDGE AMC Limited
Custodian
July 24, 2018
The Prospectus is available at the AMC’s website at
WWW.EDGEAMC.COM
EDGE AMC Limited
Sponsor & Asset Manager
Trustee
EXECUTIVE SUMMARY
EDGE AMC (Asset Management Company) Limited is launching its first
open-ended mutual fund,
namely EDGE Bangladesh Mutual Fund with an initial fund size of BDT
100 million. EDGE AMC
Limited is both the sponsor and the asset manager of this fund,
whereas Sandhani Life Insurance
Company Ltd will act as the trustee and BRAC Bank Ltd will
undertake the custodian role of the
fund. This is a 'continuous offer' fund by nature, which
facilitates the investors to subscribe and
redeem units at their will. The Fund is going to offer electronic
(online) purchases and
repurchases process considering the convenience of the
investors.
Founded by a team of investment management professionals with
strong track-record, EDGE
AMC is committed to deliver strong investment results by harnessing
long-term, value-investing
opportunities on behalf of the Unitholders. Senior executives of
the company, being CFA
charterholders, have sufficient training, experience and commitment
towards upholding
Unitholders’ interest under any circumstance. As part of such
commitment, EDGE AMC is
sponsoring the EDGE Bangladesh Mutual Fund to spread the economic
benefit of Bangladesh
capital market to wider population.
The objective of the EDGE Bangladesh Mutual Fund is to achieve
superior risk adjusted return by
– a) allocating assets optimally in contemporary macroeconomic and
market condition; and b)
selecting securities based on their ability to generate earnings/
cashflow sustainably over long-
term. The Fund will also offer tax benefits and access to IPO
subscription to its Unitholders.
EDGE BANGLADESH MUTUAL FUND 3
Table of Contents Particulars Page No. Fund Directory 4 Definitions
and Elaborations of Abbreviated Terms 5 Fund Highlights 8 Risk
Factors 10 Chapter 1 Preliminary 12 1.1 Publication of Prospectus
for Public Offering 12 1.2 Consent of the Bangladesh Securities and
Exchange Commission 12 1.3 Listing of Fund 12 1.4 Availability of
Documents for Inspection 12 1.5 Conditions imposed under Section
2CC of the BSEC
Ordinance,1969 12
1.6 General Information 15 1.7 Sale and Repurchase of Units 15 1.8
Systematic Investment Plan (SIP) 15
1.9 Declarations 16
1.10 Due Diligence Certificate 19 Chapter 2 Background 23 2.1
Preamble to Formation of EDGE Bangladesh Mutual Fund 23 2.2 Capital
Market of Bangladesh 23 2.3 Advantages of Investing in EDGE
Bangladesh Mutual Fund
24 1
2.4 Tax Advantages of Investing in EDGE Bangladesh Mutual
Fund
24 Chapter 3 The Fund 26 3.1 Formation of the Fund 26 3.2 Life of
the Fund 26 3.3 Face Value and Denomination 26 3.4 Investment
Objective 26 3.5 Investment Policies 26 3.6 Investment Restrictions
26
3.7 Valuation Policy 27 3.8 Net Asset Value Calculation 28 3.9
Limitation of Expenses 28
3.10 Price Fixation Policy, Sale and Re-purchase Procedure 28 3.11
Winding Up Policy 29 3.12 Investment Management 30 3.13 Dividend
Policy 30 Chapter 4 Investment Approach and Risk Control 31
Chapter 5 Formation, Management and Administration 32 5.1 Sponsor
of the Fund 32 5.2 Trustee of the Fund 32
34
5.3 Custodian of the Fund 32 5.4 Asset Manager 32 5.5 Auditors 35
5.6 Fees and Expenses 36 Chapter 6 Size of the Fund and Rights of
Unit Holders 39 6.1 Size of Issue 39 6.2 Sponsor’s Subscription 39
6.3 Rights of the Unit Holders 39
Chapter 7 Unit Subscription 40 7.1 Terms and Conditions of Unit
Subscription 40 Chapter 8 Sales Agents 41 8.1 Name of Selling
Agents 41 8.2 Selling Agents’ Details” 41
8.3 Bankers 42 Forms 42
EDGE BANGLADESH MUTUAL FUND 4
FUND DIRECTORY
Registered Office
Sponsor & Asset Manager EDGE AMC Limited Head Office: Rupayan
Prime, Unit B-10,
House 2, Road 7, Dhanmondi, Dhaka- 1205, Bangladesh Website:
www.EDGEAMC.com Tel: 02- 9612606
Trustee Sandhani Life Insurance Company Ltd. Sandhani Life Tower,
Rajuk Plot No. 34, Bangla Motor, Dhaka-1000, Bangladesh Website:
http://www.sandhanilife.com/ Tel: 02-9611197, 02-9664931,
01833325681-82
Custodian BRAC Bank Limited Anik Tower, 220/B, Tejgaon-Gulshan Link
Road, Tejgaon, Dhaka-1208, Bangladesh Website: www.bracbank.com
Tel: 02-8801301-32
Auditor ACNABIN Chartered Accountants BDBL Bhaban (Level 13), 12
Kawran Bazar Commercial Area, Dhaka-1215, Bangladesh Tel:
02-8144347
Banker 1. BRAC Bank Limited Gulshan Corporate Branch House 50 (1st
Floor), Road 3, Plot 2, Block SW(H)-7 Gulshan Avenue, Gulshan 1,
Dhaka-1212, Bangladesh Phone: 02-58817138
2. Eastern Bank Limited Corporate Banking, 11th Floor Head Office:
100 Gulshan Avenue, Dhaka- 1212 Bangladesh Phone:
09666-777325
For Prospectus or any other information please contact at following
corporate office of the Asset
Management Company.
EDGE AMC (Asset Management Company) Limited Rupayan Prime (Unit
B-10), House # 2, Road # 7, Dhanmondi, Dhaka-1205 Tel: +88 02
9612606 Email:
[email protected] Website: www.EDGEAMC.com A person
interested to get a prospectus may obtain from the Asset Management
Company. “If you have any query about this document, you may
consult the Asset Management Company”
EDGE BANGLADESH MUTUAL FUND 5
Definitions and Elaboration of Abbreviated Terms Rule/ : ( )
,
Act : ,
Asset Manager/Asset
Management Company/Fund Manager/Investment Manager/AMC
: The Asset Management Company (AMC) refers to EDGE AMC (Asset
Management Company) Limited.
Application Form : A form meant to be used by an investor to
purchase Units of the Scheme
Allotment : Letter of Allotment for units
BB : Bangladesh Bank
BEFTN : Bangladesh Electronic Fund Transfer Network
B/O A/C : Beneficiary Owner’s Account
Business Day : A day not being:
(1) A weekend; (2) A day on which the stock exchanges are closed;
(3) A day on which purchase and repurchase of Units is
suspended or a book closure period/ record date announced by the
Trustee/ AMC; or
(4) A day on which normal business cannot be transacted due to
unavoidable circumstances or such other events as the AMC may
specify from time to time;
(5) A day on which banks are closed.
BDT : Bangladeshi Taka
Book Closer : Sale and repurchase of units issued by Asset
Management Company and Selling Agent shall remain closed during the
month of January unless the Commission decides otherwise
CEO/MD : Chief Executive Officer / Managing Director
CDBL : Central Depository Bangladesh Ltd
CAGR : Compound Annual Growth Rate
Commission/BSEC : Bangladesh Securities and Exchange
Commission
Companies Act : ,
Confirmation of Unit Allocation
Custodian : BRAC Bank Limited
CIP : Cumulative Investment Plan
CDS : Central Depository System
DSE : Dhaka Stock Exchange Ltd.
Effective Date : The date of registration of the Trust Deed
EPS : Earnings Per Share
FI : Financial Institution
Government : The Government of the People’s Republic of
Bangladesh
SLIC : Sandhani Life Insurance Company Limited
BBL : BRAC Bank Limited
EBL : Eastern Bank Limited
ISO : Initial Subscription Offering
IPO : Initial Public Offering
Mutual Fund/ The Fund/ Unit
Fund/ Open End Mutual Fund
: EDGE BANGLADESH MUTUAL FUND
Non Resident
Bangladeshi/ NRB
: Non-resident Bangladeshi (NRB) means Bangladeshi citizens staying
abroad including all those who have dual citizenship provided they
have a valid Bangladeshi passport or those, whose foreign passport
bear a stamp from the concerned Bangladesh embassy/ High Commission
to the effect that no visa is required to travel to
Bangladesh
NAV : Net Asset Value
NBFI : Non-Bank Financial Institution
NBR : National Board of Revenue
Ongoing Offer Period : Offer of units of the Fund after the closure
of the initial offer period.
Offering Price : Price of the Securities of the Fund being
offered
Offer Document : This document issued by EDGE BANGLADESH MUTUAL
FUND, offering units of the Fund for subscription. Any
modifications to the offer document will be made by way of an
addendum which will be attached to offer document. On issuance of
any such addendum, prior approval from BSEC is required and the
offer document will be deemed to be updated by the addendum.
Prospectus : The advertisement or other documents (approved by the
BSEC), which contain the investment and all other information in
respect of the mutual fund, as required by the and is circulated to
invite the public to invest in the mutual fund.
Purchase/ Subscription : Subscription to/ purchase of units of the
Fund
Purchase Price : The price, calculated in the manner provided in
this offer document, at which the units can be purchased.
EDGE BANGLADESH MUTUAL FUND 7
Repurchase : Repurchase of units by the Fund from a unit
holder
Repurchase Price : Price at which the units can be
redeemed/repurchased and calculated in the manner provided in this
offer document.
RJSC : Registrar of Joint Stock Companies and Firms
SIP : Systematic Investment Plan
Sponsor : EDGE AMC Limited
: AMC designated official points for accepting transaction/ service
requests from investors.
Securities : Units of the Fund
Subscription : Application Money
Trustee : Sandhani Life Insurance Company Limited
Unit Holder : A person holding units of EDGE BANGLADESH MUTUAL FUND
offered under this offer document.
Unit Certificate/Certificate : Unit Certificate of the Fund in
dematerialized form under CDBL
Unit : One undivided share in the Fund
Interpretation For all purposes of this offer document, except as
otherwise expressly provided or unless the context otherwise
requires:
• Singular terms used in this offer document include the plural,
and plural terms include the singular. • Pronouns having a
masculine or feminine gender shall be deemed to include the other.
• A “crore” means “ten million” and a “lakh” means a “hundred
thousand".
EDGE BANGLADESH MUTUAL FUND 8
FUND HIGHLIGHTS Name EDGE BANGLADESH MUTUAL FUND
Type Open-End Mutual fund
Life and Size of the Fund Perpetual life and unlimited size
Sponsor EDGE AMC Limited
Trustee Sandhani Life Insurance Company Limited
Custodian BRAC Bank Limited
Initial Size of the Fund Tk. 10,00,00,000 (Taka Ten Crore) divided
into 1,00,00,000 (One Crore) Units of Tk.10 (Taka Ten) each
Face Value Tk.10 (Taka ten) per Unit
Nature Open end Mutual Fund with unlimited size.
Objective The objective of the EDGE Bangladesh Mutual Fund is to
achieve superior risk adjusted return in the forms of capital
appreciation, dividend, interest income and to provide attractive
dividend payments to the unit holders by investing the fund in
instruments of capital market, money market etc.
Minimum
Tk.50,000/- per application (5,000 Units) for institutions.
Not Applicable for SIP investors
Transparency NAV will be calculated on a weekly basis and shall be
published on the web-site of the Fund manager (www.EDGEAMC.com) and
as prescribed in the Rule.
Target Group Individuals –both resident and non-resident,
institutions–both local and foreign, mutual funds and collective
investment schemes are eligible to subscribe the Units of the
Fund.
Dividend Minimum 70 (seventy) percent of realized income of the
Fund will be distributed as dividend in Bangladeshi Taka in each
accounting year.
Dividend Distribution The dividend warrant will be distributed
within 45 (forty-five) days from the date of declaration.
Tax Benefit a) Income from a mutual fund or a unit fund up to tk.
25,000.00 (Twenty-Five Thousand) is exempted from tax under Income
Tax Ordinance 1984.
b) Investment in the Unit Fund would qualify for investment tax
credit under section 44(2) of the Income Tax Ordinance.
c) The income of the Fund will also be exempted from Tax.
Encashment The Unit holders can surrender and encash their Units to
the Asset Manager and through the authorized selling agents
appointed by the Asset Manager. The Asset Manager or selling agent
shall be liable to re-purchase the units on behalf of Fund.
Transferability The Units of the Fund are transferable by way of
inheritance/ gift and/ or by specific operation of the law.
Prospectus, Reports and Accounts
Every Unit holder is entitled to receive annual report along with
the yearly and half- yearly statements of accounts as and when
published on the asset management company’s website
(www.EDGEAMC.com).
Systematic Investment Plan (SIP) Facility
Systematic Investment Plan or SIP allows investor to invest a
certain pre-determined amount at a regular interval (monthly,
quarterly, yearly etc.). A SIP is a planned approach towards
investments and helps to inculcate the habit of saving and building
wealth for the future. Investor can start SIP with a very small
amount that is minimum BDT 1,000.
EDGE BANGLADESH MUTUAL FUND 9
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.
RISK FACTORS
Investing in the EDGE Bangladesh Mutual Fund (hereinafter the Fund)
involves certain risks that investors
should carefully consider before investing in the Fund. Investment
in the capital market and in the Fund
bears certain risks that are normally associated with making
investments in securities including loss of
principal amount invested. There can be no assurance that the Fund
will achieve its investment objectives.
The Fund value can be volatile and no assurance can be given that
investors will receive the amount
originally invested. When investing in the Fund, investors should
carefully consider the risk factors
outlined below, which are not necessarily exhaustive or mutually
exclusive:
1. General: There is no guarantee that the Fund will be able to
meet its investment objective. Unit-holders
may incur absolute and relative losses, including loss of
principal, when investing in the Fund. Mutual funds
and securities investments are subject to market risks and no
government agency or the sponsor/AMC is
offering an objective investment performance guarantee, hereby.
Investors should study this Offer
Document carefully before investing. Due to the fluctuation of the
price / value / interest rates of the
securities in which Scheme invests, the value of investment in the
Scheme may go up or down depending
on the various factors and forces affecting the capital markets and
money markets.
2. External Risk Factor: Performance of the Fund is substantially
dependent on the macro-economic
situation and capital market as well as money market of Bangladesh.
Political and social instability may
have an adverse effect on the value of the Fund’s assets. Adverse
natural calamities may impact the
performance of the Fund.
3. Market Risk: The Bangladesh capital market is highly volatile
and mutual fund prices and prices of
securities can fluctuate significantly from their respective
fundamental value estimates, at times for
prolonged period. The Fund may lose its value or incur a sizable
loss on its investments due to such market
volatility. Stock market trends indicate that prices of majority of
all the listed securities move in
unpredictable direction which may affect the value of the Fund.
Furthermore, there is no guarantee that
the market prices of the units of the Fund will fully reflect their
underlying Net Asset Values.
4. Concentration Risk: Due to a limited number of high-quality
listed stocks in both the DSE and CSE, it
may be difficult to invest the Fund’s assets in a widely
diversified equity portfolio as and when required to
do so. Very narrow and highly thinly traded bond market of the
country has not been supporting the Asset
Manager to design and implement optimum asset allocation decisions
from time to time. Limited options
in the money market instruments will narrow the opportunity of
short term or temporary investments of
the Fund which may adversely impact the returns.
5. Dividend Risk: Despite careful investment selection of companies
in the Fund, if the companies fail to
provide the expected dividend or fail to disburse dividends
declared in a timely manner that will impact
the income and the overall return of the Fund.
6. Underlying Liquidity Risk: For investing in Pre-Public Offer
Placement securities i.e. in the unlisted
equity securities by the Fund, may involve liquidity risk. In
addition, market conditions and investment
allocation may have an impact on the ability to sell securities
during periods of market volatility. Debt
securities, while somewhat less liquid, lack a well-developed
secondary market, which may restrict the
selling ability of the Fund, and may lead to the Fund incurring
losses till the security is finally sold. While
securities listed on the stock exchange carry lower liquidity risk,
the ability to sell these investments is
limited by the overall trading volume on the stock exchanges and
may lead to the Fund incurring losses till
the security is finally sold.
7. Investment Strategy Risk: Since the Fund will be an actively
managed investment portfolio; the Fund
performance will remain subject to the investment management
strategy risk. The AMC will undertake
rigorous investment research and risk management exercise at all
the time; however, there can be no
guarantee that such process and techniques will produce the desired
outcome. Due to the long-term
EDGE BANGLADESH MUTUAL FUND 11
fundamental analysis driven management style of the AMC, the Fund
may drag performance relative to the
market index/ benchmark in too weak or strong market conditions
when market volatility is high.
8. Credit Risk: Since the Fund will seek to also invest as per the
( )
, , in both equity and fixed income securities; the credit risk of
the fixed income issuers is also
associated with the Fund. Investment in fixed income securities are
subject to the risk of an issuer’s
inability to meet interest and principal payments on its
obligations and market perception of the
creditworthiness of the issuer.
9. Interest Rate Risk: The Net Asset Value (NAV) of the Fund, to
the extent invested in fixed income
securities (debt and money Market securities), will directly be
affected by changes in the general level of
interest rates. However, value of equity securities is inversely
and non-linearly related to general level of
interest rates. As allocation for equity securities will generally
be higher than that for fixed income
securities, NAV of the Fund is expected to increase from a fall in
interest rates and vice versa. Additionally,
zero coupon securities do not provide periodic interest payments to
their investors making them more
risky from interest rate risk perspective. However, the AMC may
choose to invest in zero coupon securities
that offer attractive yields commensurable for inherent higher
level of interest rate risk.
10. Issuer Risk: In addition to market and price risk, value of an
individual security can, in addition, be
subject to factors unique or specific to the issuer, including but
not limited to corporate governance risk,
management malfeasance, accounting irregularities, unfavorable
changes in management team or
management strategy leading to corporate under-performance. Such
risks can develop in an unpredictable
way where corporate insiders have way more information in their
custody than the public investors
including the AMC. Hence such risks can only be partially mitigated
by thorough research or due diligence.
To the degree that the Fund is exposed to a security whose value
declines due to issuer risk, the Fund’s
value may be impaired.
EDGE BANGLADESH MUTUAL FUND 12
CHAPTER 1: PRELIMINARY
1.1 Publication of Prospectus for Public Offering
EDGE AMC Limited (“EDGE”) has received registration certificate
from the Bangladesh Securities &
Exchange Commission under Securities & Exchange Commission Act,
1993 and
( ) , made thereunder and also received consent for issuing
prospectus for public
offering. A complete copy of the prospectus is available for public
inspection at Rupayan Prime (Unit B-10),
House # 2, Road # 7, Dhanmondi, Dhaka-1205, the registered office
of EDGE AMC Limited, the Sponsor and
Asset Manager of EDGE BANGLADESH MUTUAL FUND, here in after
referred to as the Fund.
1.2 Consent of the Bangladesh Securities and Exchange
Commission
“APPROVAL OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS
BEEN OBTAINED TO
THE ISSUE/ OFFER OF THE FUND UNDER THE SECURITIES AND EXCHANGE
ORDINANCE, 1969 AND THE
( ) , . IT MUST BE DISTINCTLY UNDERSTOOD THAT
IN GIVING THIS APPROVAL THE COMMISSION DOES NOT TAKE ANY
RESPONSIBILITY FOR THE
FINANCIAL SOUNDNESS OF THE FUND, ANY OF ITS SCHEMES OR THE ISSUE
PRICE OF ITS UNITS OR FOR
THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED
WITH REGARD TO
THEM. SUCH RESPONSIBILITY LIES WITH THE ASSET MANAGER, TRUSTEE,
SPONSOR AND/ OR
CUSTODIAN.”
1.3 Listing of Fund
The Fund, being an open-ended one, will not be listed with any
stock exchanges of the country. Hence the Units of the Fund will
not be traded in the stock exchanges unless otherwise BSEC and
stock exchange houses make arrangement in future. In that case
public communication will be made as per BSEC’s approval.
Units of the Fund will always be available for sale and surrender/
repurchase except on the last working
day of every week and during book closure period/record date of the
Fund at the office of the Asset
Manager and the office so of authorized selling agents. Asset
Manager shall disclose selling price and
surrender/repurchase price of Units at the beginning of business
operation on the first working day of
every week as per the Rule.
1.4 Availability of Documents for Inspection
I. Copy of this prospectus will be available at the registered
office of the Asset Manager and offices of the authorized selling
agents of the Fund. This prospectus will also be available at the
website of Bangladesh Securities and Exchange Commission
(www.sec.gov.bd), EDGE AMC Limited (www.EDGEAMC.com).
II. Copy of the trust deed will be available for public inspection
during business hours at the office of the asset manager of the
Fund. One will be able to purchase a copy of the trust deed by
paying the price as determined by the Asset Manager.
1.5 Conditions imposed under Section 2CC of the Securities and
Exchange Ordinance, 1969
1. The Fund shall not account for any upward revaluation of its
assets creating reserve without
clearance from Bangladesh Securities and Exchange Commission;
2. The Fund shall not be involved in option trading, short selling
or carry forward transactions;
3. A confirmation of Unit Allocation shall be issued at the cost of
the Fund at par value of Tk. 10.00
each within 90 (ninety) days from the date of sale of such
Units;
4. Money receipt/acknowledgement slip issued at the time of sale of
Units will be treated as
allotment letter, which shall not be redeemable/transferable;
EDGE BANGLADESH MUTUAL FUND 13
5. The annual report of the Fund/or its abridged version will be
published within 45 (forty-five)
days of the closure of each accounting year of the Fund;
6. An annual report and details of investment and savings of the
Fund shall be submitted to the
Commission, Trustee and Custodian of the fund within 90 (ninety)
days from the closure of the
accounts;
7. Half-yearly accounts/financial results of the Fund will be
published in at least one English and
another Bangla National daily newspapers within 30 (thirty) days
from end of the period;
8. Dividend shall be paid within 45 (forty-five) days of its
declaration, and a report shall be
submitted to BSEC, Trustee and Custodian within 7 (seven) days of
dividend distribution;
9. Net Asset Value (NAV) of the Fund shall be calculated and
disclosed publicly at least once a week;
10. The script wise detail portfolio statement consisting of
capital market and other than capital
market holdings of the fund shall be disclosed in the website of
the AMC on quarterly basis
within thirty (30) days of each quarter end;
11. After initial public subscription, the sale and
repurchase/surrender price of Units will be
determined by the Asset Management Company. NAV at market price per
unit calculated on a
date shall from the sale price of units by rounding up the amount
and shall be effective up to
next calculation of NAV of the Fund. The difference between sale
and repurchase price shall
primarily be Tk 0.30 (thirty paisa) per unit which may be changed
in future, but not be over
5% of the Sale price of the unit. The Asset Manager may reduce the
above difference for
Systematic Investment Plan (SIP) or any other ground with the
approval of the Trustee;
12. BSEC may appoint auditors for special audit /investigation on
the affairs of the Fund, if it so
desires;
13. The Fund shall maintain separate bank account(s) to keep the
sale proceeds of Units and to meet
up day-to-day transactions including payment against Repurchase of
Units. All transactions of
the account shall be made through banking channel and shall be
properly documented;
14. The prospectus/abridged version of the prospectus shall be
published in one widely circulated
Bengali national daily newspaper. Provided that information
relating to publication of
prospectus be published in 2 (two) national daily newspapers
(Bengali and English) and one
online newspaper;
15. If abridged version of the prospectus is published in the
newspaper, complete prospectus shall
be made available to the applicants;
16. If the Asset Manager fails to collect the minimum 40% of the
initial target amount under of the ( ) , , will refund the
subscription money
within 30 days without any deduction. In case of failure, the Fund
manager will refund the same
with an interest @18 per cent per annum from its own account within
the next month;
17. On achievement of 40% of the initial target amount, the Fund is
allowed to transfer the money
from Escrow Account to Operational Account and to commence
investment activities of the
Fund with permission of the Trustee;
18. The AMC should ensure compliance of of the ( ) ,
.
19. The size of the Fund will be increased from time to time by the
AMC subject to approval of the
Trustee and with intimation to the Commission;
20. Confirmation of Unit Allocation of the sponsor’s contribution
amounting to Tk 1,00,00,000/-
(Tk One Crore) only shall be subject to a lock-in period of minimum
three years from the date
of formation of the Fund and after that period, entire holding may
be transferred to any eligible
EDGE BANGLADESH MUTUAL FUND 14
institution who has the qualification to be a sponsor of a mutual
fund with prior permission of
BSEC;
21. A Confirmation of Unit Allocation amounting Tk. 1,00,00,000/-
(Tk. One crore and 10% of the
initial size of the Fund) will be issued in favor of the Sponsor.
The said confirmation letter shall
be in the custody of the Trustee. No splitting of the Unit of
Sponsor shall be made without prior
approval of the Commission.
22. Annual fee of the fund shall be submitted to the Commission on
the fund size i.e. year-end Net
Asset Value at market price of the fund on advance basis as per
Rule; and may adjust the fee in
the next year if necessary.
23. Subscription period of the fund will be 45 (forty-five) days
which will be started on July 25, 2018
and be ended on September 09, 2018 as per of ( )
, .
The following conditions will also be adhered to:
1. As per provisions contained in the ( ) , , regarding
limitation of time on closure of subscription, the initial public
subscription will remain open for
forty-five days or for a period up to achievement of the initial
target amount, whichever is
earlier;
2. The paper cutting of the published prospectus and all other
published documents/notices
regarding the Unit Fund shall be submitted to the Commission within
24 hours of publication
thereof;
3. The Asset Management Company shall submit 10 (ten) copies of
printed prospectus to the
Commission for official record;
4. The Asset Management Company shall ensure in writing to the
Commission that the
prospectus/ abridged version is published correctly and is a
verbatim copy of the
prospectus/abridged version vetted by the Commission;
5. The expiry date of the sponsor’s locked-in portion shall be
specifically mentioned on the body
of the jumbo confirmation of Unit allocation;
6. The AMC shall apply the spot buying rate (TT clean) of Sonali
Bank prevalent on the date of
opening of subscription for conversion of foreign currencies;
7. The AMC shall submit to the Commission a diskette containing the
vetted prospectus and its
abridged version;
8. All conditions imposed under Section 2CC of the Securities and
Exchange Ordiance,1969 must
be complied with and be incorporated in the body of the prospectus
and in its abridged version;
9. After due approval by the Trustee regarding issue and formation
expenses, the AMC shall
submit in detail along with supporting documents to the Commission
regarding issue and
formation expenses within 15 (fifteen) days of operation of the
fund. The auditor of the fund
shall also put opinion about the above expenses in the initial
financial statements of the fund;
10. The investment policy and guideline and information on
constituents of Investment Committee
of the fund approved by the Board shall be submitted to the
Commission within 30 (thirty) days
from the receipt of the Consent Letter. The investment policy and
guideline shall include among
other issues, the investment delegation power of Chief Executive
Officer and the Committee
separately and also the meeting resolution presentation
process;
11. After due approval of the trustee, the asset manager shall
submit the systematic investment
plan (SIP) brochure to the Commission complying the Rules within 30
(thirty) days of the
issuing consent letter.
1.6 General Information
i. This prospectus has been prepared by EDGE AMC Limited based on
the Trust Deed executed
between the Trustee and the Sponsor of the Fund, which is approved
by the Commission and
available publicly. The information contained herein is true and
correct in all material aspects
and there are no other material facts, the commission of which
would make any statement
herein misleading.
ii. No person is authorized to give any information to make any
representation not contained in
this prospectus and if so given or made, such information or
representation must not be relied
upon as having been authorized by EDGE AMC Limited.
iii. The issue as contemplated in this document is made in
Bangladesh is subject to the exclusive
jurisdiction of the court of Bangladesh. Forwarding this prospectus
to any person residing
outside Bangladesh in no way implies that the issue is made in
accordance with the laws of that
country or is subject to the jurisdiction of the laws of that
country.
1.7 Sale and Repurchase of Units
EDGE AMC Limited will maintain two BO Accounts with BRAC Bank
Limited, custodian of EDGE Bangladesh
Mutual Fund for creation and redemption of units namely “EDGE
Bangladesh Mutual Fund - Sale of units”
and “EDGE Bangladesh Mutual Fund – Repurchase of units”.
For sale of units EDGE AMC Limited will issue a certificate for the
units sold and send it to BRAC Bank
Limited for setting-up of demat request. After the acceptance of
demat setup by EDGE AMC Limited from
its terminal, units will be credited to the BO Account “EDGE
Bangladesh Mutual Fund- Sale of units”. Then
BRAC Bank Limited will transfer the units from “EDGE Bangladesh
Mutual Fund- Sale of units” to the unit
holders BO Accounts as per instruction of EDGE AMC Limited.
In the case of redemption/Repurchase by the Asset Manager the unit
holder will transfer his/her/the
Institutional holders’ units to the “EDGE Bangladesh Mutual Fund–
Repurchase of units” account. BRAC
Bank Limited will debit the unit certificates from the investor’s
BO Accounts and transfer it to the “EDGE
Bangladesh Mutual Fund– Repurchase of units” account.
Simultaneously, the payment will be made
through A/C payee Cheque or funds will be transferred to investor’s
Bank Account through BEFTN as per
the request of the client.
1.8 Systematic Investment Plan (SIP)
A Systematic Investment Plan or SIP is a smart and easier mode for
investing money in mutual funds. SIP
allows an investor to invest a certain pre-determined amount at a
regular interval (monthly, quarterly,
yearly etc.). A SIP is a planned approach towards investments and
helps to inculcate the habit of saving and
building wealth for the future.
Buy and Surrender SIP Process:
An investor can invest through SIP either by auto debit system
provided against investor’s Bank Account
or by providing monthly predetermined cheques via selling agents at
a regular interval (monthly,
quarterly, yearly etc.). Investor must have a BO Account. Investor
will get SIP units in their BO Accounts
based on a discount from the latest/ongoing effective Weekly Sale
price of the fund.
It is advisable to continue SIP investments with a long-term
perspective, there is no compulsion. Investors
can discontinue the plan at any time. If an investor wants to
terminate the SIP before two (2) years, up to
1% discount from the repurchase/ surrender price will be applicable
on total accumulated invested
amount on the date of cancellation of the scheme. After maturity of
SIP, the investor can easily surrender
through AMC or Selling Agents.
EDGE BANGLADESH MUTUAL FUND 16
Benefits may be offered for Investors as such:
SIP encourages a disciplined investment. While invested through
SIP, investor commits himself to save
regularly. Different benefits may be offered as follows:
• Flexibility: Investor can start SIP with a very small amount that
is 1000/2000/3000/4000/5000 or
multiple of 1000/500. One can also increase/ decrease the amount
being to be invested in regular
fashion.
• Flexible SIP Tenor: The scheme will be offered for at least 2
years or any other period set by AMC.
However, investor can set SIP scheme for 3 years/ 5 years/ 10
years. After this time period the individual
scheme will be matured and may surrender or continue holding the
Units after maturity. If surrendered,
no fees/charges will be charged on surrender and may also offer
highest premium over the declared
surrendered price.
• No Minimum lot size: Under SIP, there will be no minimum lot size
as like normal investors. Based on
a discount from declared sales price per unit available, units will
be credited to investor’s account.
However, any fraction amount remaining will be converted when it
sums up to one unit. The fractional
amount will be kept as liability of the fund in a separate account
head.
• Sale at discount and premium at Surrender: SIP investor may buy
units at a discount from weekly
Sales Price offered to normal investor. In addition to that SIP
investor can surrender at a premium of
repurchase price offered to normal unit holders at maturity as per
SIP brochure.
• CIP option for the SIP investors: SIP investors can choose either
option of cash dividend or cumulative
investment plan (CIP) or mix of both. If a SIP investor chooses CIP
(i.e Dividend reinvestment process)
instead of cash dividend, they will also enjoy CIP units at a
discount of prevailing Sales price used for
CIP conversion. After CIP conversion, they will get dividend on
total number of unit in the next year.
Details of SIP Scheme will be provided in the Scheme Brochure in
future.
1.9 Declarations
Declarations about the responsibility of the Sponsor
The sponsor, EDGE AMC Limited, accepts full responsibility for the
authenticity and accuracy of the
information contained in this Prospectus and other documents
regarding EDGE Bangladesh Mutual Fund.
To the best of the knowledge and belief of the Sponsor, who has
taken all reasonable care to ensure that all
the conditions and requirements concerning this public offer and
all the information contained in this
document, drawn up by virtue of the Trust Deed of the Fund by the
entrusted Asset Management Company
(AMC), have been met and there is no other information or
documents, the omission of which may make
any information or statements therein misleading.
The Sponsor also confirms that full and fair disclosures have been
made in this Prospectus to enable the
investors to make an informed decision for investment.
Sd/-
Chairman
Declarations about the Responsibility of the Custodian
We, as Custodian of the EDGE Bangladesh Mutual Fund, accept the
responsibility and confirm that we
shall:
i. Keep all the securities in safe custody and shall provide the
highest security for the assets of the
Fund; and
ii. Preserve necessary documents and record so as to ascertain
movement of assets of the Fund as
per ( ) , .
Sd/- Mr. Tareq Refat Ullah Khan Head of Corporate Banking BRAC Bank
Limited
Declarations about the Responsibility of the Asset Manager
We, as the Asset Manager of EDGE Bangladesh Mutual Fund, accept the
responsibility and confirm that: This Prospectus has been prepared
by us based on the Trust Deed, the Investment Management
agreement, the ( ) , and other related agreements and
examination of other documents as relevant for adequate disclosure
of the Funds objectives and
investment strategies to the investors. We also confirm that, i.
The prospectus is inconformity with the documents, materials and
papers related to the public offer;
ii. All the legal requirements of the public offer have been duly
fulfilled; and
iii. The disclosures made are true, fair and adequate for
investment decision.
Investors should be aware that the value of investments in the Fund
could be volatile and such no
guarantee can be made about the returns from the investments that
the Fund will make. Like any other
equity investment, only investors who are willing to accept a
moderate degree of risk, should invest in the
Fund. Investors are requested to pay careful attention to the risk
factors as detailed in the Risk Factor
section and to be aware of the risks associated with any investment
in the Fund. Sd/-
Ali Imam, CFA Managing Director & CEO EDGE AMC Limited
EDGE BANGLADESH MUTUAL FUND 18
Declarations about the Responsibility of the Trustee
We, as Trustee of the EDGE Bangladesh Mutual Fund, accept the
responsibility and confirm that we shall I. be the guardian of the
Fund, held in trust, for the benefit of the Unit holders in
accordance with the
Rules and the Trust Deed;
II. always act in the interest of the Unit holders;
III. take all reasonable care to ensure that the Fund floated and
managed by the Asset Management
Company are in accordance with the Trust Deed and the Rules;
IV. make sure that there is no contradiction between Prospectus and
Trust Deed &
( ) ,,
V. make such disclosures by the Asset Management Company to the
investors as are essential in order to
keep them informed about any information, which may have any
bearing on their investments;
VI. and take such remedial steps as are necessary to rectify the
situation where we have reason to believe
that the conduct of business of the Fund is not in conformity with
relevant Rules.
Sd/- Md. Mizanur Rahman Company Secretary Sandhani Life Insurance
Company Limited
EDGE BANGLADESH MUTUAL FUND 19
1.10 Due Diligence Certificate
DUE DILIGENCE CERTIFICATE BY SPONSOR - () () [ () ]
To
The Honorable Chairman Bangladesh Securities and Exchange
Commission
Securities Commission Bhaban E-6/C, Agargaon, Sher-e-Bangla Nagar
Administrative Area Dhaka-1207, Bangladesh. Subject: EDGE
Bangladesh Mutual Fund.
We, the sponsor of the above-mentioned forthcoming mutual fund,
state as follows:
1. We, as the sponsor to the above-mentioned fund, have examined
the draft prospectus and
other documents and materials as relevant to our decision;
and
2. We warrant that we shall comply with the ( ) ,
Bangladesh Securities and Exchange Commission (Public Issue) Rules,
2015, Trust Deed of the
Fund and the rules, orders, guidelines, directives, notifications
and circulars that may be
issued by Commission from time to time in this respect.
WE CONFIRM THAT:
(a) All information in the draft prospectus forwarded to the
Commission is authentic and
accurate;
(b) We as sponsor of the fund as mentioned above will act as per
clauses of the trust deed executed
with the trustee and shall assume the duties and responsibilities
as described in the trust deed
and other constitutive documents;
(c) We shall also abide by the ( ) , and conditions
imposed by the Commission as regards of the fund; and
(d) We shall act to our best for the benefit and interests of the
unit holders of the fund.
For Sponsor
Chairman
EDGE BANGLADESH MUTUAL FUND 20
DUE DILIGENCE CERTIFICATE BY TRUSTEE - () () [ () ]
To The Honorable Chairman Bangladesh Securities and Exchange
Commission
Securities Commission Bhaban E-6/C, Agargaon, Sher-e-Bangla Nagar
Administrative Area Dhaka-1207, Bangladesh.
Subject: EDGE Bangladesh Mutual Fund.
We, the under-noted trustee to the above-mentioned forthcoming
mutual fund, state as follows:
1. We, while act as trustee to the above-mentioned fund on behalf
of the investors, have examined the
draft prospectus and other documents and materials as relevant to
our decision; and
2. We warrant that we shall comply with the ( ) ,, Bangladesh
Securities and Exchange Commission (Public Issue) Rules, 2015,
Dhaka Stock Exchange (Listing)
Regulations, 2015, Chittagong Stock Exchange (Listing) Regulations,
2015, Trust Deed of the Fund and
the Rules, guidelines, circulars, orders and directions that may be
issued by the Bangladesh Securities
and Exchange Commission from time to time in this respect.
WE CONFIRM THAT:
a) All information and documents as are relevant to the issue have
been received and examined by us and
the draft prospectus forwarded to the Commission have been approved
by us;
b) We have also collected and examined all other documents relating
to the fund;
c) While examining the above documents, we find that all the
requirements of the
( ) , have been complied with;
d) We shall act as trustee of the fund as mentioned above as per
provisions of the trust deed executed with
the sponsor and shall assume the duties and responsibilities as
described in the trust deed and other
constitutive documents;
e) We shall also abide by the ( ) , and conditions imposed
by the Commission as regards of the fund; and
f) We shall act to our best for the benefit and sole interests of
the unit holders of the fund;
For Trustee Sd/- Md. Mizanur Rahman Company Secretary Sandhani Life
Insurance Company Limited
EDGE BANGLADESH MUTUAL FUND 21
DUE DILIGENCE CERTIFICATE BY CUSTODIAN - () () [ () ]
To The Honorable Chairman Bangladesh Securities and Exchange
Commission
Securities Commission Bhaban E-6/C, Agargaon, Sher-e-Bangla Nagar
Administrative Area Dhaka-1207, Bangladesh.
Subject: EDGE Bangladesh Mutual Fund.
We, the under-noted custodian to the above-mentioned forthcoming
mutual fund, state as follows:
1. We, while acting as custodian to the above mentioned fund on
behalf of the investors, shall comply with
the ( ),, Depository Act, 1999, Depository Regulation, 2000,
Depository (User) Regulation, 2003, Trust Deed of the Fund and the
Rules, guidelines, circulars, orders
and directions that may be issued by the Bangladesh Securities and
Exchange Commission from time to
time in this respect.
WE CONFIRM THAT:
a) We will keep all the securities (both listed and Non-listed) and
Assets of the "EDGE Bangladesh Mutual
Fund” including FDR receipts in safe and separate custody as per of
(
) , and will provide highest security for the assets of the
Fund;
b) We shall act as custodian of the fund as mentioned above as per
provisions of the custodian agreement
executed with the asset management company and shall assume the
duties and responsibilities as
described in the trust deed of the mentioned fund and other
constitutive documents;
c) We shall also abide by the ( ) , and conditions imposed
by the Commission as regards of the fund; and
d) We shall act to our best for the benefit and sole interests of
the unit holders of the fund;
For Custodian
Sd/-
Mr. Tareq Refat Ullah Khan Head of Corporate Banking BRAC Bank
Limited
EDGE BANGLADESH MUTUAL FUND 22
DUE DILIGENCE CERTIFICATE BY ASSET MANAGER - () () [ () ]
To The Honorable Chairman Bangladesh Securities and Exchange
Commission
Securities Commission Bhaban E-6/C, Agargaon, Sher-e-Bangla Nagar
Administrative Area Dhaka-1207, Bangladesh.
Subject: EDGE Bangladesh Mutual Fund.
We, the under-noted Asset Manager to the above mentioned
forthcoming mutual fund, state as follows:
1. We, while act as asset manager to the above mentioned mutual
fund, declare and certify that the
information provided in the prospectus, is complete and true in all
respects;
2. We further certify that we shall inform the Bangladesh
Securities and Exchange Commission
immediately of any change in the information of the fund; and
3. We warrant that we shall comply with the Securities and Exchange
Ordinance, 1969, the
( ) , , Bangladesh Securities and Exchange Commission (Public
Issue)
Rules, 2015, Dhaka Stock Exchange (Listing) Regulations, 2015,
Chittagong Stock Exchange (Listing)
Regulations, 2015, and the Rules, guidelines, circulars, orders and
directions that may be issued by the
Bangladesh Securities and Exchange Commission from time to time in
this respect.
WE CONFIRM THAT:
a) The draft prospectus forwarded to the Commission is in
conformity with the documents, materials and
papers relevant to the fund;
b) All the legal requirements connected with the said fund have
been duly complied with; and
c) The disclosures made in the draft prospectus are true, fair and
adequate to enable the investors to make
a well-informed decision for investment in the proposed fund.
For the Asset Manager
Sd/- Ali Imam, CFA Managing Director & CEO EDGE AMC
Limited
EDGE BANGLADESH MUTUAL FUND 23
CHAPTER 2: BACKGROUND 2.1 Preamble to Formation of EDGE Bangladesh
Mutual Fund
Mutual fund is the most popular investment vehicle in the world. An
asset management company (AMC)
pools funds from individual and institutional investors under a
mutual fund structure and then invest in
different securities with varying risk-return profiles like stocks,
fixed income securities and money market
instruments etc. from that mutual fund to generate sustainable
wealth for investors/ fund subscribers. An
open-end mutual fund issues an “Unit” against the money received
from a fund-investor who is interested
to invest in the underlying securities but does not have the time
and resources to undertake investment
research or due-diligence activities. The asset manager of the
mutual fund, with adequate professional
credential and experience, undertakes the necessary investment
research and management role on behalf
of the investor. At any point in time, a fund-investor can
surrender his/her “Unit” to the asset manager to
cash-out the investment balance.
Mutual funds are very efficient risk-taking vehicle in the sense
that they provide sufficient diversification
benefit to investors even with smaller investable fund which is not
available otherwise. By investing in an
open-end mutual fund, the investors gain access to a thoroughly
researched and professionally managed
capital market portfolio without doing the hard-work
themselves.
EDGE AMC Limited, a new generation asset management company founded
by a group of investment
professionals with strong credentials and track-record, is
committed to deliver highest-quality investment
management services to capital market investors in Bangladesh
through the launching of EDGE Bangladesh
Mutual Fund. This balanced, open-end mutual fund will strive
continuously to find the best value
investment opportunities in Bangladesh to drive long-term
sustainable wealth for Unitholders.
EDGE AMC Limited is the Sponsor and Asset Manager of the Fund. The
other parties include Sandhani Life
Insurance Company and BRAC Bank Limited being the Trustee and the
Custodian of the Fund, respectively.
2.2 The Capital Market of Bangladesh
Bangladeshi stock market posted strong returns since 2000 as the
economy kept growing at more than 6%
p.a. with leading companies posting stronger earnings growth
throughout the cycles. EDGE’s proprietary
data suggest that – even with a stock market crash in 2010-11,
blue-chip stock composite outperformed
other liquid asset-classes significantly since 2000. Strong
corporate performance and a number of
regulatory reforms implemented by the BSEC helped the country to
grow the foreign portfolio investment
(FPI) remarkably. Resultantly, weight of Bangladeshi stocks in the
MSCI Frontier Market Index increased
by more than 6-times since 2010-11.
Participation of local institutional investors in the capital
market of Bangladesh is not up-to the mark in
comparison to peer countries. Pension funds and life insurance
companies are hardly participating in the
capital market of the country whereas banks’ capital market
exposures are closer to their limits. Under
such circumstances, retail investors are the ones that are more
active but, unfortunately with limited skill
and awareness necessary for investment success. Such market
structure drives significant market
inefficiencies and volatility. The concepts of professional
investment management and investing in Mutual
Funds are still in their early days in the country. Currently there
are only 37 close end mutual funds and
about 42 open end mutual funds in Bangladesh and total AUM is
approximately BDT 101.42bn as on May
2018 (representing 2.6% of market capitalization), while in India
Asset under Management is
approximately BDT 27,917.7 bn as on May 2018 (representing 15.2% of
market capitalization).
Mutual Funds will play a big role in institutionalizing the
market-structure and distributing sweet-fruits of
the capital market in Bangladesh. EDGE Bangladesh Mutual Fund is
inspired by and aims to fit well into
such strategic outlook.
2.3 Advantages of Investing in EDGE Bangladesh Mutual Fund
EDGE Bangladesh Mutual Fund offers following value-propositions to
the potential investors:
I. EDGE Bangladesh Mutual Fund is ambitious to be the highest
integrity investment product available
to the target investors by putting Unitholders’ interest before any
other consideration under all
circumstances. Being CFA charterholders, all three senior
executives of EDGE AMC Limited will be
adhering to CFA Institute’s Code of Ethics and Standards of
Professional Conduct in addition to the
wmwKDwiwUR I G·‡PÄ Kwgkb (wgDP¨qvj dvÛ) wewagvjv, 2001 for
protecting Unitholders’ interest.
II. Diversification contributes to optimize risk-return balance for
the investors as it helps them not to
put all the eggs in the same basket. EDGE Bangladesh Mutual Fund
will be offering a value-oriented
portfolio, well-diversified into many sectors, companies and
securities to generate respectable
investment performance with high probability under different market
scenario.
III. EDGE Bangladesh Mutual Fund, through its diversified pool of
investments, will provide small investors access to returns of the
wider market, which may be very costly for retail investors to
achieve individually.
IV. EDGE Bangladesh Mutual Fund’s performance will benefit from
EDGE’s strong proprietary
investment research capability. Senior management executives of the
AMC are well-trained in
investment management with proven investment research and advisory
track-record in Bangladesh
for last 10 years. High-quality macro/industry/company databases,
financial/ quantitative models
and strong corporate access of the management team will generate
unique perspective and insight
for the Fund to deliver strong performance to its
Unitholders.
V. In Bangladesh, mutual funds enjoy a 10% (ten percent) reserved
quota for all Initial Public Offerings
(IPOs). IPOs in Bangladesh have historically posted much better
time-weighted-returns to
subscribers and therefore, Unitholders’ access to the reserved IPO
subscription quota through
Mutual Fund investments offers value not available otherwise.
VI. The investors will be able to save significantly in transaction
costs as he/she will have access to a
large number of securities by purchasing a single unit of the
mutual fund.
VII. Dividend income from the Fund will be tax-free for up to Taka
25,000 as permitted under the Finance
Act.
VIII. Investment in the Fund will qualify for investment tax credit
in a range of 10-15% under section
44(2) of the Income Tax Ordinance 1984.
IX. Management and operations of mutual funds are subject to strict
regulations from the BSEC and the
sponsor-appointed Trustee, both of whom closely monitor the
performance of the fund. The laws
governing mutual funds require exhaustive disclosure to the
regulator and general public.
X. EDGE Bangladesh Mutual Fund will declare 70% of annual realized
earnings as dividends and also
offers the investors to choose between receiving cash dividends and
cumulative investment plan
(CIP) to compound investment balance by minimizing transaction
costs. The latter allows the fund
manager to reinvest the dividend in the prevailing investment
opportunities.
XI. Price of the Units of the fund won't be determined by demand
and supply in the public market, rather
by Net Asset Value (NAV). The AMC will be liable to repurchase the
Units surrendered by the
Unitholders on the basis of NAV which mitigates Unitholders’
liquidation risk.
2.4 Tax Advantage of investing in EDGE Bangladesh Mutual Fund:
2.4.1 Tax advantage on Income: Income from a mutual fund or a unit
fund up to tk. 25,000.00 (Twenty-
Five Thousand) is exempted from tax as per clause 22A of Schedule
(Part A) under Income Tax Ordinance
1984.
2.4.2 Investment Tax credit: According to the current Income Tax
Ordinance (ITO) 1984, section
44(2)(c), amended in 2016, amount of allowable investment is –
actual investment or 25% of the total
(taxable) income or BDT 15,000,000.00 whichever is less.
EDGE BANGLADESH MUTUAL FUND 25
According to Section 44(2)(b) under Income Tax Ordinance 1984, the
tax rebate rate is from 15% to 10%
as per following schedule:
Total Income Rate of Tax Rebate Up to BDT 10,00,000.00 15% of
eligible amount. From BDT 10,00,001.00 to BDT 30,00,000.00 a) BDT
250,000.00 of eligible amount at the
rate of 15%. b) Remaining of the eligible amount at 12%.
Above BDT 30,00,000.00 a) BDT 250,000.00 of eligible amount at the
rate of 15%.
b) Next BDT 5,00,000.00 of eligible amount at the rate of
12%.
c) Remaining of the eligible amount at 10%.
Example:
An individual earning total annual income BDT 5,000,000.00 (Fifty
Lac) only in a year may have allowed
investment for tax rebate BDT 1,250,000.00 (BDT 5,000,000.00
multiplied by 25% allowed).
As this amount BDT 1,250,000.00 is lower than BDT 15,000,000.00,
the person’s eligible amount for tax
rebate is BDT 1,250,000.00.
The individual will have total tax rebate calculated as
under:
a) 1st BDT 250,000.00 of eligible amount at the rate of 15%
= 37,500.00
b) Next BDT 5,00,000.00 of eligible amount at the rate of
12%.
=60,000.00
c) Remaining of the eligible amount i.e. Next BDT 5,00,000.00 at
10%.
=50,000.00
Total rebate 1,47,500.00 This investor can reduce tax liability by
BDT 1,47,500.00 by investing in this fund.
This is a simple illustration. The amount can vary and will depend
on individual circumstances. Also, please note that the tax rebates
may change as per Government’s decision in any year. Investors are
advised to consult with tax advisor, if required.
EDGE BANGLADESH MUTUAL FUND 26
CHAPTER 3: THE FUND 3.1 Formation of the Fund
The trust deed of the Fund was registered on 31st May, 2018 under
the Trust Act, 1882 and Registration
Act, 1908. The Fund was registered by the BSEC on 19th June, 2018
under the
( ) , .
3.2 Life of the Fund
The Fund will be an open-end mutual fund with a perpetual life.
Institutional, local and foreign, and
individual investors, resident and non-resident, are eligible to
invest in this Fund. The initial target size of
the Fund will be Tk 10,00,00,000.00 (Taka Ten crore) only divided
into 1,00,00,000 (One crore) Units of
Tk 10 (Taka ten) each. Size of the Fund will be increased from time
to time by the Asset Manager subject
to approval from the Trustee and with due intimation to the
BSEC.
3.3 Face Value and Denomination
Face value of each Unit will be Tk.10 (Taka Ten) only. Initially,
unit holders of the Fund shall be issued with
a confirmation of unit allotment letter by the Asset Manager at the
cost of the Fund in any denomination
but not less than 500 (five hundred) units for individuals and
5,000 (five thousand) units for institutions.
3.4 Investment Objective
The objective of the EDGE Bangladesh Mutual Fund is to maximize
risk-adjusted-return for Unitholders in
the form of capital appreciation, dividend income and interest
income from a combined portfolio of equity,
debt, money market instruments and other permissible
securities.
3.5 Investment Policies
i. The Fund shall invest subject to the and only in those
securities, deposits and investments
approved by Bangladesh Securities and Exchange Commission and/or
the Bangladesh Bank
and/or the Insurance Development & Regulatory Authority (IDRA)
of Bangladesh or any other
competent authority in this regard.
ii. Not less than 60% of the total assets of the Scheme of the Fund
shall be invested in capital market
instruments out of which at least 50% shall be invested in listed
securities.
iii. Not more than 25% of the total asset of the Scheme of the Fund
shall be invested in Fixed Income
Securities (FIS).
iv. Not more than 15% of the total asset of the Scheme of the Fund
shall be invested in Pre-IPOs at
one time.
v. All money collected under the Fund shall be invested only in
encashable/transferable instruments,
securities whether in money market or capital market or privately
placed pre-IPO equity,
preference shares, debentures or securitized debts.
vi. The Fund shall get the securities purchased or transferred in
the name of the Fund.
vii. Only the Asset Management Company will make the investment
decisions and place orders for
securities to be purchased or sold for the Scheme's
portfolio.
3.6 Investment Restrictions
i. The Fund shall not invest more than 10% of its total assets in
any one particular company.
ii. The Fund shall not invest in more than 15% of any company’s
paid up capital.
iii. The Fund shall not invest more than 20% of its total assets in
shares, debentures or other
securities of a single company or group.
EDGE BANGLADESH MUTUAL FUND 27
iv. The Fund shall not invest more than 25% of its total assets in
shares, debentures or other
securities in any one industry.
v. The Fund shall not invest in, or lend to, any scheme under the
same Asset Management Company.
vi. The Fund shall not acquire any asset out of the Trust property,
which involves the assumption of
any liability that is unlimited or shall result in encumbrance of
the Trust property in any way.
vii. The Fund or the Asset Management Company on behalf of the Fund
shall not give or guarantee
term loans for any purpose or take up any activity in contravention
of the . viii. The Fund shall buy and sell securities on the basis
of deliveries and shall, in all cases of purchases,
take delivery of securities and in all cases of sale, deliver the
securities on the respective settlement
dates as per the custom and practice of the stock exchanges and
shall in no case put itself in a
position whereby it has to make short sale or carry forward
transaction.
ix. The Fund shall not involve in option trading or short selling
or carry forward transaction.
x. The Fund shall not buy its own unit.
3.7 Valuation Policy
i. For listed securities, the average quoted market price on the
stock exchanges on the date of
valuation shall form the basis of any calculation of Net Asset
Value of such securities in the
portfolio of the Fund.
ii. The fund shall fix the valuation method for the Scheme subject
to the prior approval of the
Commission.
iii. The Fund shall follow the method approved by the Commission
for valuation of the non-listed
investment, if any, and the Asset Management Company and the
Trustee shall periodically review
the non-listed investment, if any, and the Trustee shall
periodically review the value of such
investments. The auditors shall comment in the annual report of the
Scheme of the Fund.
iv. If the securities were not traded either at DSE or CSE on the
particular valuing date, immediate
previous average price, which one is nearer, but not longer than 30
days, to the valuing date will
be taken into account;
v. If the securities were not traded either at DSE or CSE for a
period for over 30 days, the Fund shall
follow the method approved by the Commission for valuation of the
non-traded investment and
the Trustee shall periodically review the value of such
investments;
vi. The valuation of non-traded securities will be made with their
reasonable value by the Asset
Management Company and approved by the Trustee and commented upon
by the Auditors in the
Annual Report of the Mutual Fund but shall not be more than the
intrinsic value of the securities;
vii. The valuation of non-listed securities will be made by the
Asset Management Company with their
reasonable value and approved by the Trustee and commented upon by
the Auditors in the Annual
Report of the Fund.
viii. Once non-listed securities are valued, the valued amount will
be considered for purpose of valuing
the Fund’s assets in any interval of time until the securities are
further revalued by the Asset
Management Company;
ix. The Asset Management Company and the Trustee will value the
non-listed securities at least once
in every three months;
x. The income accrued on any instruments on the date of valuation
shall be taken into account in any
calculation of Net Asset Value of such securities in the portfolio
of the Fund;
xi. In case of deferred expenses, accrued expenses for the period
will be taken into account for
determining total liabilities.
3.8 Net Asset Value (NAV) Calculation
The Fund will use the following formula to derive NAV per
unit:
Total NAV = VA - LT
NAV per unit = Total NAV / No. of units outstanding
VA = Value of all securities in vault + Value of all securities
placed in lien + Cash in
hand and at bank + Value of all securities receivables +
Receivables of proceeds of sale of investments
+ Dividend receivables net of tax + Interest/profit receivables
deposits net of tax + Issue expenses
net of amortization expense as on date + Printing, publication and
stationery expenses amortized as
on date
LT = Value of all securities payable + Payable against purchase of
investments +
Payable as brokerage and custodial charges + Payable as Trustee
fees + All other payable related to
printing, publication and stationery + Accrued deferred expenses
with regard to management fee,
annual fee, audit fee and safe keeping fee.
3.9 Limitation of Expenses
i. All expenses should be clearly identified and appropriated to
the Fund.
ii. The Asset Management Company may charge Fund for Investment
Management and Advisory
fees.
iii. Asset Management Company may amortize the initial issue costs
of the Fund over a period as
provided for in the ; Provided that initial issue expenses/Initial
Public Offering (IPO)
costs shall not exceed 5% of the Fund of the collected amount
raised under the Fund.
iv. In addition to the fees mentioned hereinabove the Asset
Management Company may charge
the Scheme of the Fund with the following recurring expenses,
namely;
a. Marketing and selling expenses including commissions of the
agents, if any;
b. Brokerage and Transaction costs;
c. Cost of registrar services for transfer of securities sold or
redeemed;
d. Trusteeship fees;
e. Custodian fees;
g. Re-registration fees, if any.
h. Relevant expenditure for calling meeting by the trustee
committee; and
i. Other expenses applicable to the Mutual Fund.
3.10 Price Fixation Policy, Sale & Repurchase Procedure
After completion of initial subscription, the Fund will be made
open to the investors for regular buy-sale
of Units. The date of re-opening shall be declared by the asset
manager upon approval of the Trustee and
with due intimation to the BSEC.
The asset manager shall calculate the Net Asset Value (NAV) per
unit on the last working day of every week
as per formula prescribed in the and shall disclose sales price and
repurchase/ surrender price per
unit determined on the basis of NAV before commencement of business
operation of the first working day
of the following week to the Commission and to the investors
through at least one national daily, the
website of the asset management company and the authorized selling
agents of the Fund. The difference
between sales price and repurchase/ surrender price shall primarily
be TK 0.30 (thirty paisa), which may
be changed in future, but not be over 5% of the sale price of the
Unit. The Asset Manager may reduce the
difference with the approval of the trustee.
EDGE BANGLADESH MUTUAL FUND 29
Sale and repurchase procedure is given below:
i. The Units of EDGE Bangladesh Mutual Fund, hereinafter referred
to as the Fund, may be bought
and Surrendered through EDGE AMC Limited and authorized selling
agents appointed by EDGE
AMC Limited from time to time.
ii. Minimum purchase quantity for individual investors is 500 (five
hundred) units and for
institutional investors is 5,000 (five thousand) units.
iii. Application for purchase of units should be accompanied by an
account payee cheque/ pay order/
bank draft in favor of “EDGE Bangladesh Mutual Fund” for the total
value of Units purchased.
iv. After clearance / encashment of cheque/ draft/ pay order, the
applicant will be issued with one
unit allocation confirmation against every purchase with a
denomination of number of units he /
she / the Institutional investor applies for. The units will also
be delivered to the Unit holder’s BO
A/C.
v. After receiving the surrender application form at AMC’s office,
the client will be paid in 3 (three)
working days through account payee cheque or BEFTN transfer as par
client’s request.
vi. Partial surrender (fraction of total units held under a Unit
Allocation Confirmation) is allowed
without any additional cost subject to minimum surrender quantity
is 500 (five hundred) units
both of individuals and institutions. Upon partial surrender, the
unit holder will be issued with a
new unit allocation confirmation representing the balance of his
unit holding.
vii. All payments/ receipts in the connection with or arising out
of transactions in the units hereby
applied for shall be in Bangladeshi Taka.
3.11 Winding up Policy
3.11.1 Procedure of Winding Up
i. If the total number of outstanding unit certificates held by the
unit holders after repurchase
at any point of time falls below 25% of the actual certificate
issued, the Fund will be subject
to wound up.
ii. The Fund may be wound up on the happening of any event, which,
in the opinion of the
Trustee with approval from the Commission, requires the Scheme to
be wound up.
iii. The Scheme may also be wound up if the Commission so directs
in the interest of the unit
holders.
iv. Where a Scheme is to be wound up in pursuance to the above, the
Trustee and the Asset
Management Company shall give simultaneously separate notice of the
circumstances
leading to the winding up of the Scheme to the Commission and if
winding up is permitted
by the Commission, shall publish in two national daily newspapers
including a Bangla
newspaper having circulation all over Bangladesh.
3.11.2 Manner of Winding Up
i. The Trustee shall call a meeting within 30 days from the notice
date of the unit holders of
a Scheme to consider and pass necessary resolutions by three-fourth
majority of the unit
holders present and voting at the meeting for authorizing the
Trustee to take steps for
winding up of the Scheme. If it fails to have three-fourth majority
mandate, the Commission
shall have the power to supersede the mandate if situation demands
such.
ii. The Trustee shall dispose of the assets of the Scheme of the
Fund in the best interest of the
unit holders; Provided that the proceeds of sale made in pursuance
of the , shall in
the first instance be utilized towards discharge of such
liabilities as are properly due under
the Scheme and after making appropriate provision for meeting the
expenses connected
EDGE BANGLADESH MUTUAL FUND 30
with such winding up, the balance shall be paid to the unit holders
in proportion to their
respective interest in the assets of the Scheme as on the date when
the decision for winding
up was taken.
iii. Within thirty days from the completion of the winding up, the
Trustee shall forward to the
Commission and the unit holders a report on the winding up
containing particulars, such
as circumstances leading to the winding up, the steps taken for
disposal of assets of the
Scheme before winding up, expenses of the Fund for winding up, net
assets available for
distribution to the unit holders and a certificate from the
auditors of the Scheme of the
Fund.
3.11.3 Effect of Winding Up
On and from the date of the notice of the winding up of the Fund,
the Trustee or the Asset Management Company, as the case may be,
shall
i. Cease to carry on any business activities of the open-end fund;
ii. Cease to create and cancel unit of the open-end fund; iii.
Cease to issue and redeem units of the open-end fund.
3.12 Investment Management
EDGE AMC Limited shall conduct the day-to-day management of the
Fund's portfolio as the Asset Manager
subject to the provisions laid down in the and trust deed or any
general directions given by the Trustee
and/or the Commission. However, EDGE AMC Limited shall have
discretionary authority over the Fund's
portfolio about investment decisions. (Please look into Section
5.4.1 on page 32 for details on Investment
Management Process)
3.13 Dividend Policy i. The accounting year of the Fund shall be
January 01 to December 31;
ii. The Fund shall distribute minimum 70%, or as may be determined
by the from time to
time, of the annual net income of the Fund as dividend at the end
of each accounting period after
making provision for bad and doubtful investments. The Fund shall
create a dividend
equalization reserve by appropriation from the income of the
Scheme;
iii. Before declaration of dividend the Asset Management Company
shall make a provision in
consultation with the Auditors if market value of investments goes
below the acquisition cost
and the method of calculation of this provision will be
incorporated in the notes of accounts;
iv. Surpluses arising simply from the valuation of investments
shall not be available for dividend;
v. Dividend warrants will be dispatched within 45 days from the
declaration of such dividends.
EDGE BANGLADESH MUTUAL FUND 31
CHAPTER 4: INVESTMENT APPROACH AND RISK CONTROL A top down and
bottom up approach may adopt the following investment management
and
risk control processes -
i. EDGE AMC has formed an Investment Committee (IC) comprising of
the Chief Investment
Officer, Chief Risk and Compliance Officer and Chief Executive
Officer for reviewing and
approving investment decisions for the Fund in a well-rounded way.
Research Analysts will
present their independent investment research findings in the IC
meeting from time to time.
ii. The IC will thoroughly assess macro-economic and
socio-political condition of the country to
form risk-return expectations objectively for different asset
classes in the context of prevailing
market valuation level. Relative risk-return attractiveness of
different asset classes as
suggested by the research findings will drive asset allocation
decisions for the Fund.
iii. The IC will screen securities with qualitative filters to find
the securities issued by the issuers
with highest integrity from management and governance quality
perspective. Background
check of the key officials, assessment of long-term sustainability
and competitiveness, financial
reporting quality, shareholding structure, management compensation
policy, credit and
dividend payment history of the subject companies/issuers will be
reviewed carefully.
iv. Research Analysts of EDGE AMC will undertake proprietary
fundamental analysis processes to
determine fair value estimates for the securities under review
considering their long-term
business and financial performance outlook. Research Analysts will
consult with
corresponding management executives and industry insiders for each
company under review
in this process. Securities with highest upside potential will be
recommended to the IC at the
end of this stage.
v. The IC will review the outcome of the fundamental analysis and
will construct a model portfolio
by combining securities that offer highest risk-adjusted-return.
The IC will also ensure
adequate diversification (to different asset classes, sectors and
companies) is achieved at this
stage.
vi. IC will determine appropriate risk management strategy for
individual securities and at the
portfolio level.
vii. IC will monitor business performance of the portfolio
companies/ issuers on continuous basis
and will rebalance portfolio as and when needed to achieve
investment objectives.
EDGE BANGLADESH MUTUAL FUND 32
CHAPTER 5: FORMATION, MANAGEMENT & ADMINISTRATION
5.1 Sponsor of the Fund
EDGE AMC Limited will be the Sponsor of the Fund. EDGE AMC Limited
was founded in July 2017 and the
Company got registration certificate as an asset management company
from BSEC in February 2018. As a
newly formed asset management company, EDGE is committed to provide
high quality investment
management services to the capital market investors in Bangladesh.
As part of this commitment, EDGE is
sponsoring its first mutual fund- EDGE Bangladesh Mutual Fund- by
deploying significant portion of its
capital in the Fund to ensure complete alignment with Unitholders’
interest.
5.2 Trustee of the Fund
To reinforce maximum trust and confidence of the investors,
supervisory bodies and the persons concerned towards the Fund, the
Sandhani Life Insurance Company Limited will act as the Trustee of
the Fund.
Sandhani Life Insurance Company Limited is a leading insurance
company so far engaged in Micro Insurance for the Poor People,
Ordinary Life Policy for the General, Group Insurance for the
Corporate, Education Policy for the Students, Hajj Policy for the
Religious People activities and are Qualified and capable to act as
the Trustee of a mutual fund.
The Trustee shall constitute Committee with a minimum of two
members, which shall be responsible for discharging the obligations
of the Trustee and the first such Committee shall be constituted
with the following members, namely: -
1. Chairman, Sandhani Life Finance Ltd. 2. CFO, Sandhani Life
Insurance Company Limited 3. Company Secretary, Sandhani Life
Insurance Company Limited
The Trustee committee may be changed by the Trustee from time to
time with approval of BSEC.
5.3 Custodian of the Fund
BRAC Bank Ltd, a banking company, incorporated under Companies Act,
1994 and Bank Companies Act,
1991 and registered with the Bangladesh Securities & Exchange
Commission on December 15, 2009 to act
as Custodian, engaged in, among others, custodial services having
required capabilities, qualifications and
adequate skills in its concerned field of activities.
BRAC Bank has one of the strongest balance sheets among the
Bangladesh-based banks which is reflected
in Moody’s recent assignment of Ba3 rating- the highest rating
Moody’s assigned for banks in Bangladesh.
The bank posted BDT 5.6 bn net profit after tax in 2017 with a
balance sheet of US$ 3.8 bn at the end of
December 2017. The bank has been acting as Custodian to a number of
other mutual funds quite
successfully since 2010.
5.4 Asset Manager
EDGE AMC Limited will be the Asset Manager of the Fund. Founded by
a team of investment management
professionals with strong track-record, EDGE AMC is committed to
deliver strong investment results by
harnessing long-term, value investing opportunities by acting as
the Asset Manager of the EDGE
Bangladesh Mutual Fund. This balanced, open-end mutual fund will
strive continuously to find the best
value investment opportunities in Bangladesh to drive long-term
sustainable wealth for Unitholders.
5.4.1 Investment Management Process
Investment decision making process: EDGE AMC has formed an
Investment Committee (IC)
comprising of the Chief Investment Officer, Chief Risk and
Compliance Officer and Chief Executive
Officer for reviewing and approving investment decisions for the
Fund in a well-rounded way.
Research Analysts will present their independent investment
research findings in the IC meeting
EDGE BANGLADESH MUTUAL FUND 33
from time to time. Investment decisions will be made by combining
top-down asset allocation
strategy with bottom up security selection strategy as described
below-
Top-down analysis to optimize the asset allocation mix
o Finding the best asset class in prevailing macroeconomic and
socio-political
context
o Focusing mostly on key macro drivers like growth outlook, trend
of financial
sector liquidity and interest rates and policy changes
Bottom-up focus to find most attractive securities in each asset
class
o Identifying securities mispricing of new information or emerging
developments
by maintaining the information processing edge.
o Avoiding valuation trap, maintaining buy-sell discipline in line
with target fair
value estimates
o Maintaining psychological, philosophical and knowledge edge to
post reasonable
performance throughout market cycle.
Asset allocation process The IC will thoroughly assess
macro-economic and socio-political
condition of the country to form risk-return expectations
objectively for different asset classes in
the context of prevailing market valuation level. Relative
risk-return attractiveness of different
asset classes as suggested by the research findings will drive
asset allocation decisions for the
Fund.
generating accurate, timely and actionable research recommendations
-
Screening to a smaller universe of stocks after initial
screening
o Quality of governance and management (to assess how well
minority
shareholders’ right is protected)
o Focusing on industry leaders with strong business performance
track-record
o Strong balance sheet (cash-rich companies with low debt) with
reasonable
capital allocation history/ strategy for driving competitive return
on investments
Understanding fundamentals of underlying business
o Finding key drivers- decomposing business model and
performance
o Understanding long-term competitiveness of the underlying
operation
o Establishing cause-effect relationships among key variables
Connect with industry insiders e.g. management, distributors,